As we near the end of the year, it’s worth looking at the trends that have cropped up and even evolved in recent months. Of course, the COVID-19 pandemic is responsible for many of the radical changes that we’re seeing. In retail, but in many other industries, too.
Payments are a fine example, with meteoric growth in online shopping coupled with changing attitudes among brick-and-mortar shoppers. People are less comfortable physically interacting with strangers or electronic equipment. The combined effect of these two phenomena has seen payment trends moving away from cash and checks toward contactless and ecommerce gateways.
Different nations have their own digital payments trends, according to their history, culture, and consumer preferences. Nonetheless, these are some of the key payment processing trends companies in any economy or market should be aware of. Especially as we gear up for 2022.
A Non-Contact Sport
Retail staff today are frequently working behind plexiglass screens and many customers are reluctant to physically engage with them. As a result, we’ve seen significant growth in contactless POS payments. This is one of the most notable retail payment trends, as contactless cards facilitate quicker checkout and departure.
Contactless is also more reliable than chip-and-pin transactions, while safety is another benefit of changes in online payment processing trends. This is evident around the world; UK consumer organization Which? calculated contactless card fraud amounted to two pence for every hundred pounds spent in 2020. In the EU, every fifth contactless transaction requires a PIN code, which also helps to minimize fraud. This has imbued smartphone payment apps with a high level of consumer trust. Mobile proximity payment volumes in America alone were worth $131 billion in 2020.
Buy Before You Try
Stores used to be a place where buying decisions were made. Today, they’re increasingly a place where those decisions are researched or where orders are collected. The growth of buy online pickup in-store (BOPIS) and buy online return in-store (BORIS) requires unified payment systems that can identify an online transaction and issue an in-store refund quickly and seamlessly.
The technology required for this is complicated further if the retailer in question also has either an app or a loyalty program. We consider the growth in ecommerce payment trends below.
It’s no surprise that checks were never part of ecommerce payment trends, but their in-store popularity has also declined sharply. They’re practically non-existent in many nations. In the UK where they originated, check use fell by almost 80 percent between 2009 and 2019.
More unexpected has been the drop in cash usage, with electronic retail payment systems often eliminating the option to pay with cash. In 2019, cash was used for 32 percent of global POS volume—last year, that fell to just 20.5 percent. Banknotes and coins are increasingly supplanted by retail payment apps and electronic retail payment systems.
The 2021 Global Payments Report by WorldPay revealed global ecommerce was worth $4.6 trillion last year, up almost 20 percent from 2019. In the U.S., online retail sales equated to 14.4 percent of total retail in 2020. Much of this was due to lockdowns preventing brick-and-mortar stores from opening. However, consumers are also increasingly willing to make purchases online that would historically have been done in person.
The future of cryptocurrencies remains highly uncertain, with governments clamping down on activities like mining and regulators stridently warning about crypto price volatility. Nevertheless, Microsoft and Starbucks now accept Bitcoin, while Visa accepts the USDC stablecoin cryptocurrency. PayPal even allows you to buy and sell cryptos, though only in the U.S. and UK.
The rise in ecommerce has gone hand-in-hand with the growth of loyalty cards and retailer-specific funds, such as loyalty programs which allow credits to be used as payment. AllBusiness recently reported on the growth of third-party loyalty platforms like Clover, reflecting the growing demand for personalized customer service—and the growing desire among businesses to understand their customers at a granular level.
Loyalty doesn’t have to involve dedicated accounts or proprietary retail payment solutions, either. It can be managed through social media channels. Shopify developed a “buy” button specifically for Facebook, meaning brands don’t even need a website anymore for their loyal customers. A social media profile is often sufficient.
Adopting Tomorrow’s Digital Payments Trends Today
With retail payment solutions evolving rapidly post-pandemic, companies who haven’t already moved with the times risk being left behind. From retail payment apps to cryptocurrencies and in-store loyalty programs, there are numerous payment trends in retail that savvy businesses need to embrace to retain a healthy customer base.
Check out our whitepaper where we review how payments plays a key role in the customer experience. It also shares how you can amplify omnichannel with unified commerce, such as with partners like NewStore + Adyen.